Buy Wipro; target of Rs 440: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Wipro and has recommended buy rating on the stock with a target of Rs 440 in its November 6, 2012 research report.

“Wipro’s effort to mine its existing clients has met with some success. Revenue per client for Wipro is the lowest among Tier-1. We believe that the management strategy is the step in the right direction and could unleash the growth potential.”

“In terms of increasing revenue per client over the last 12 quarters, TCS (4% CQGR) fared the best, followed by Wipro (2.2% CQGR) and Infosys (1.8% CQGR). For Q2FY13 annualized, TCS ($10.96m/client/year) has the highest revenue followed by Infosys ($10.05m/client/year) and HCL Tech ($8.31m/client/year), whereas Wipro ($6.56m/client/year) has the least. Wipro has the strongest growth potential by virtue of improving client mining as it derives ~21% lower revenue per client per year compared to HCL Tech (the next in pecking order) and ~40% lower than TCS.”

Wipro is currently trading at 12.2 FY14E earnings estimates (13x on adjusted basis) ~30% discount to TCS and its last 5-year average. We see a favourable risk-reward. We retain our “buy” rating,” says Prabhudas Lilladher research report.

Non-Institutions holding more than 90% in Indian cos

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